Gordon Gee, currently Chancellor and Professor of Law at Vanderbilt University, is returning to Columbus for a second stint as President of The Ohio State University. Gee may be the best-known Mormon law professor in the U.S., though his fame is not based primarily on his work in law.

He began his academic career as Assistant Dean for the University of Utah College of Law, and he later became Associate Dean and Professor at my new law school, the J. Reuben Clark Law School of Brigham Young University. After serving as Dean of the West Virginia University College of Law, Gee moved into the President's office, and he has worked in university administration ever since.

Though he has gained notoriety as a university president, some of you may know Gordon Gee for his important role in Delaware corporate law. The case of In re Limited, Inc. raised the issue of director independence with respect to Gee, who was a member of The Limited's board of directors when it approved a Contingent Stock Redemption Agreement that benefited CEO Leslie Wexner. You see, Wexner was an alum of Ohio State, and he had donated $25 million to establish The Wexner Center for the Arts during Gee's tenure as President. In response to the directors' motion to dismiss, Vice-Chancellor Noble addressed the following issue: "if a director is the head of a charitable or educational institution, under what circumstances may his independence be called into question by the charitable giving of the allegedly dominating person, in this instance, Mr. Wexner?"

VC Noble answered that question as follows:

The determination of whether a particular director is "beholden" to an allegedly controlling person is not limited to the power to affect the director in the future. One may feel "beholden" to someone for past acts as well. It may reasonably be inferred that Mr. Wexner's gift of $25 million to Ohio State was, even for a school of that size, a significant gift. While the gift was not to Gee personally, it was a positive reflection on him and his fundraising efforts as university president to have successfully solicited such a gift. In this context, even though there can be no "bright line" test, a gift of that magnitude can reasonably be considered as instilling in Gee a sense of "owingness" to Mr. Wexner. For that reason, I conclude that the plaintiffs have successfully alleged a reasonable doubt as to Gee's independence from Mr. Wexner's domination.

This decision is interesting for many reasons, but perhaps most importantly, it is interesting to note the behavioral assumption on which it is based, namely, that Gee might feel a sense of obligation to Wexner for a past gift to a university for which Gee was (then) no longer president. How does VC Noble know that Gee might have such feelings? Hmm.

The Delaware courts are required to make all sorts of behavioral assumptions with regard to corporate directors, but evidence about director behavior is largely anecdotal. If any young professors out there are looking for a research agenda, "director behavior studies" is ripe for the harvest.

By the way, Gee is still a member of The Limited board of directors, and Wexner is still the CEO.

Corporate Law, Delaware, Law Schools & Lawyering

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